Live By The Light Switch, Die By The Light Switch

It was 187 degrees today in the San Fernando Valley, plummeting to about 154 at my home in Santa Monica. And every conversation I've had today has featured the heat wave. People are elephants when it comes to the weather. With the threat of rolling blackouts now very probable, everyone is remembering back to the trumped-up energy crisis (or should I say Enronergy crisis) of 2000-2001, back in those heady days when Gray Davis was considered a possible Presidential candidate.

And that's why this can be a teachable moment for the California electorate, and a real opportunity for Phil Angelides. It won't be fair if Arnold Schwarzenegger is blamed for our energy demand problems; well, not completely fair, anyway. But it wasn't fair for Gray Davis either. And Arnold played a major role in that.

Literally every conversation I had today, and the vast majority of comments I heard driving home on local talk radio, referenced Enron. The history of the 2000-2001 energy crisis is well-known to all residents of the Golden State. Enron manipulated energy markets, forcing power plants offline, creating phantom congestion on transmission lines, making fake sales to artifically lower supply, and eventually getting a ten-fold increase in prices. The various degrees of schemes to manufacture a favorable market were legion. Of course, there are the famous tapes that showed Enron energy traders cheering forest fires, asking power plants to go offline, and yukking it up over "Grandma Millie" having to pay $250 dollars a megawatt-hour. But here are a couple other schemes that I didn't know about:

Megawatt laundering is the term, analogous to money laundering, coined to describe the process of obscuring the true origins of specific quantities of electricity being sold on the energy market. The California energy market allowed for price distinctions between electricity produced in-state and out-of-state. It was therefore advantageous to make it appear that electricity was being generated somewhere other than its true origin.

Overscheduling is a term used in describing the manipulation of transporting electricity along power lines. Power lines have a defined maximum load. Lines must be booked (or scheduled) in advance for transporting bought-and-sold quantities of electricity. "Overscheduling" means a deliberate reservation of more line usage than is actually required and can create the appearance that the power lines are congested. Overscheduling was one of the building blocks of a number of scams. For example, the Death Star group of scams played on the market rules which required the state to pay "congestion fees" to alleviate congestion on major power lines. "Congestion fees" were a variety of financial incentives aimed at ensuring power providers solved the congestion problem. But in the Death Star scenario, the congestion was entirely illusory and the congestion fees would therefore simply increase profits.

It's extremly likely that none of that is happening right now. But what most of the California electorate does not know is the current governor's role in the energy crisis. The great Foundation for Taxpayer and Consumer Rights details it in full:

Internal Enron e-mails confirm that Arnold Schwarzenegger was among a small group of executives who met with Lay at the posh Peninsula Beverly Hills hotel in May of 2001, in the midst of California's energy crisis. The Foundation for Taxpayer and Consumer Rights, which obtained the e-mails, is calling on Schwarzenegger to acknowledge the meetings and disclose the information that was presented and discussed. The meeting with Enron occurred ten days after rolling blackouts darkened California for two consecutive days; Schwarzenegger has previously said that he does not remember such a meeting.

"You don't meet with America's most well-known corporate crook in the middle of California's biggest financial disaster and not remember," said FTCR's senior consumer advocate Douglas Heller. "Mr. Schwarzenegger should come clean about what happened at that meeting and if he shares Ken Lay's views on energy regulation."

The documents provide a list of invitees to the hastily arranged meeting and a list of those who actually attended. Only eleven of the 45 invitees attended, including Schwarzenegger. The meeting was meant to be an opportunity to gain business community support for Enron's "comprehensive solution" to the energy crisis. In one e-mail, Enron's VP of Public Relations wrote: "We'd like to position this meeting as an insider's conversation of what's going on with the energy situation. This meeting should be for principals only." (emphasis in original)

The emails are here.

Schwarzengger and the late Mr. Lay apparently discussed a forthcoming lawsuit brought by Gov. Davis and Lt. Gov. Bustamante that sought to retrieve $9 billion in losses incurred during the 2000 energy crisis. Greg Palast has more:

Here's the story Arnold doesn't want you to hear. The biggest single threat to Ken Lay and the electricity lords is a private lawsuit filed last year under California's unique Civil Code provision 17200, the "Unfair Business Practices Act." This litigation, heading to trial now in Los Angeles, would make the power companies return the $9 billion they filched from California electricity and gas customers.

Now follow the action. One month after Cruz brings suit, Enron's Lay calls an emergency secret meeting in L.A. of his political buck-buddies, including Arnold. Their plan, to undercut Davis (according to Enron memos) and "solve" the energy crisis -- that is, make the Bustamante legal threat go away.

How can that be done? Follow the trail with me.

While Bustamante's kicking Enron butt in court, the Davis Administration is simultaneously demanding that George Bush's energy regulators order the $9 billion refund. Don't hold your breath: Bush's Federal Energy Regulatory Commission is headed by a guy proposed by ... Ken Lay.

But Bush's boys on the commission have a problem. The evidence against the electricity barons is rock solid: fraudulent reporting of sales transactions, megawatt "laundering," fake power delivery scheduling and straight out conspiracy (including meetings in hotel rooms). So the Bush commissioners cook up a terrific scheme: charge the companies with conspiracy but offer them, behind closed doors, deals in which they have to pay only 2 cents on each dollar they filched.

Problem: the slap-on-the-wrist refunds won't sail if the governor of California won't play along. Solution: Recall the Governor.

New Problem: the guy most likely to replace Davis is not Mr. Musclehead, but Cruz Bustamante, even a bigger threat to the power companies than Davis. Solution: smear Cruz because -- heaven forbid! -- he took donations from Injuns (instead of Ken Lay).

The pay-off? Once Arnold is governor, he blesses the sweetheart settlements with the power companies. When that happens, Bustamante's court cases are probably lost. There aren't many judges who will let a case go to trial to protect a state if that a governor has already allowed the matter to be "settled" by a regulatory agency.

Schwarzenegger used the energy crisis to attack Gov. Davis throughout the recall, and it paid off. The $9 billion dollar lawsuit was a little complicated for voters. So was the various nefarious dealings by Enron. Arnold kept it simple. "Gray Davis turned your lights off, I'll fix everything." It worked.

Well, it's 5 years later. And we're at a Stage 2 Alert (the blackouts begin at Stage 3). Some papers wrote articles today claiming that Schwarzenegger will benefit from the long-term contracts for energy signed by his predecessor Gray Davis. But demand is higher than ever before. Sprawl has added to the unsustainability. The population growth has coincided with the hottest areas of the state. The overdevelopment replaces the chapparal with blacktop and actually traps the heat, making it warmer even when the sun isn't out (a recent study showed that the temperature has increased in CA at night even more than in the daytime). And now is a perfect time for Phil Angelides to remind voters of the aforementioned story. "The last time we had blackouts, the governor met with criminals who wanted to protect their scam. He didn't fix the problem, he caused the problem."

I'm telling you that this is a winning argument. There isn't a soul in this state that isn't engaged with this story. So far Angelides has blamed Schwarzenegger for not building more power plants. That's exactly the wrong thing to say. Building infrastructure is not the argument you need to be making right now; that's on the ballot and it's Arnold's baby, what he believes he can ride to victory. It's time to tell the truth about the governor's relationship to Enron, his role in manipulating consumers to get elected, his continuing role in shilling for energy companies (This is a good primer).

Keep it simple, Phil. Arnold's a crook who's stolen from every man, woman and child in this state. It's a winning formula. It has the added benefit of being true.